The Australian Dollar gained ground against the US Dollar despite an increase in inflation in the US, which led to hawkish comments from Federal Reserve Chair Jerome Powell. The AUD/USD pair held steady at 0.6624 as markets awaited the release of Australia’s Wage Price Index.
In his remarks, Powell expressed less confidence in the disinflation outlook, citing concerns over inflation and predicting a positive GDP growth of 2% or higher. The US Producer Price Index (PPI) rose by 0.5% month-over-month in April, surpassing expectations and indicating potential economic strength.
Australia’s budget for 2024-25 has returned to a deficit after a surplus in the previous year. ANZ analysts noted that the budget includes fiscal easing equivalent to around 0.25-0.5% of GDP. The upcoming release of the Wage Price Index is expected to show stable growth of 0.9% quarter-over-quarter and 4.2% year-over-year.
On a technical analysis front, the AUD/USD pair is currently neutral to upward biased, with potential resistance levels at 0.6648 and 0.6700. Should the pair break above these levels, further gains towards the year-to-date high of 0.6728 and December high of 0.6871 could be seen. However, a break below 0.6600 could lead to a pullback towards moving averages at 0.6569 and 0.6546, with further support at the 200-DMA at 0.6521.
Overall, the AUD/USD pair remains relatively stable despite external economic factors, with upcoming Australian data releases likely to influence its movement in the short term. Traders and investors will be closely monitoring economic indicators for insights into the future direction of the currency pair.
